Dueñas v. Life Care Centers of America, Inc. (10/21/2014)

October 31, 2014

Arizona Court of Appeals Division One Holds That (1) Beneficiaries’ Wrongful Death Claims Are Not Subject to Arbitration Agreements Entered Into by Decedent, and (2) Where Parties Enter Into a Series of Transactions, Each with Separate Arbitration Agreements, the Court May Determine Whether a Dispute Arising from a Specific Transaction Is Subject to Arbitration.

Maria Aspeitia was admitted four times into Glendale Care Center as a respite-care resident.  Aspeitia’s daughter, acting as her legal representative, signed arbitration agreements with the nursing home on behalf of her mother before Aspeitia’s first two admissions.

Following Aspeitia’s death, her daughter, now acting as special administrator of Aspeitia’s estate and on behalf of Aspeitia’s statutory beneficiaries, brought an action in superior court against Glendale Care Center for wrongful death and for abuse, neglect, and exploitation under the Adult Protective Services Act (“APSA”).  The court granted defendant’s motion to dismiss, finding that all claims were subject to arbitration.

On appeal, the court first rejected plaintiffs’ arguments that the arbitration agreements were procedurally or substantively unconscionable and unreasonable and determined that the agreements were enforceable.  Nonetheless, the court found that neither the wrongful death claims nor the APSA claims were subject to arbitration.

The court held that because wrongful death claims are distinct claims sustained by the named beneficiaries and are not derivative of the decedent’s rights, the beneficiaries are not bound by the decedent’s agreement to arbitrate.  As for plaintiffs’ APSA claims, the court determined that part of the alleged unlawful conduct occurred during Aspeitia’s third and fourth visits to the nursing home, which were not governed by any arbitration agreements.  The court rejected defendant’s argument that the arbitration agreements that Aspeitia’s daughter signed during her mother’s first and second visits to the nursing home should also apply to her third and fourth visits, instead construing the term “stay” in the agreements to mean “each distinct period of residency.”

The court accordingly reversed and remanded the superior court’s dismissal of the wrongful-death claim and its dismissal of the portion of the APSA claim that arose from the third and fourth visits.  Chief Judge Johnsen added that the question of the scope of the two arbitration agreements should have been decided in the first instance by the arbitrator, not the court, but nonetheless concurred in the opinion.

Judge Swann authored the opinion of the Court, which Presiding Judge Gemmill joined and Chief Judge Johnsen specially concurred.